The government’s new “vacant building credit” will cost the City millions of pounds a year in affordable housing levies

The City resolved today to work with other London boroughs to seek to overturn the new rules, and to seek an exemption from the rules for the City

New rules on the required affordable housing contribution levied on empty properties could cost the City of London Corporation up to eight million pounds a year, severely reducing its ability to deliver its affordable housing programme in the future, a report shown to the City’s Planning & Transportation Committee has found.

The City of London’s Local Plan requires new housing developments to make a contribution towards the provision of affordable housing. This can either be on site, equivalent to 30% of units, or it can be delivered off-site as a financial contribution equivalent to 60% of the proposed units. This approach is delivered through section 106 obligations, and has raised £19.7m over the past 10 years out of total developer contributions for affordable housing of £39.9m.

On 28 November 2014 the government announced two changes to the rules:

New developments of 10 units or less with a gross floorspace of less than 1,000 sqm will not have to pay affordable housing contributions

Vacant buildings being converted into residential accommodation will be given a “vacant building credit” which reduces the affordable housing levy liability from covering the whole floorspace to only covering the increase in floorspace.

In the City the minimum threshold will represent an uplift from 9 specified in the Local Plan to 10 which will have a limited impact, but the vacant building credit will have a significant impact on the City’s ability to deliver affordable housing in line with the local plan. The vacant building credit applies to residential development, not commercial development.

At a meeting of the Planning & Transportation Committee today (3 February), members of the Committee resolved to authorise officers to look into making the case that the vacant building credit should not apply to the City of London, and securing a locally specific exemption. Members also resolved to work with other London boroughs affected by the changes to seek a reversal of this change.

The City’s Chief Planning Officer Annie Hampson explained: “The City of London is a densely built environment and most of our development is commercial, to meet the demand for high-quality office space for the business City. However London continues to be an attractive for luxury apartments, and we receive planning applications for residential buildings. As London continues to face a crisis in the provision of affordable housing, it is concerning that these rules will reduce significantly the ability of local authorities to provide additional affordable housing.”

The City of London provides affordable housing in seven London boroughs, across 11 sites, most recently opening Horace Jones House in Southwark.

The City of London Corporation provides local government and policing services for the financial and commercial heart of Britain, the 'Square Mile'. In addition, the City Corporation has three roles: (1) we support London’s communities by working in partnership with neighbouring boroughs on economic regeneration, education and skills projects. In addition, the City of London Corporation’s charity City Bridge Trust makes grants of more than £15 million annually to charitable projects across London and we also support education with three independent schools, three City Academies, a primary school and the world-renowned Guildhall School of Music and Drama. (2) We also help look after key London heritage and green spaces including Tower Bridge, Museum of London, Barbican Arts Centre, City gardens, Hampstead Heath, Epping Forest, Burnham Beeches, and important ‘commons’ in south London. (3) And we also support and promote the ‘City’ as a world-leading financial and business hub, with outward and inward business delegations, high-profile civic events, research-driven policies all reflecting a long-term approach. See www.cityoflondon.gov.uk for more details.